Madagascar’s mining projects gain new support but investors aren’t convinced yet, here’s why the political risk remains critical

Madagascar’s new military-led government marks a critical turning point for the island nation’s mining sector after October 2025 political upheaval. Despite initial investor concerns, the government backs major mining projects while political uncertainty clouds long-term confidence. The balance between official support and market hesitation will shape mining investment patterns through 2026.

Government Support Reshapes Mining Outlook in December 2025

Madagascar’s military-led administration installed in October 2025 has moved swiftly to back promising mineral projects. The government endorsed the Bekisopa high-grade iron ore project operated by Akora Resources on December 11, demonstrating commitment to sector development. New Prime Minister Herintsalama Rajaonarivelo, an economist with World Bank experience, represents a shift toward business-friendly policies.

President Michael Randrianirina signaled transparency priorities when authorities discovered 300 kg of emerald rock allegedly hidden by the previous administration. Officials stated these national treasures would be sold on international markets, establishing a tone of governance reform. This symbolic gesture aims to distinguish the new regime from previous handling of extractive resources.

Mining Sector Potential Faces Investor Skepticism

Madagascar possesses world-class mineral deposits that attract global attention. The nation holds 26 million tonnes of graphite reserves, produces 7,000 tonnes of rare earths annually, and operates the Ambatovy nickel-cobalt mine, a joint venture between Japan’s Sumitomo Corporation and South Korea’s KOMIR. Major players like Rio Tinto have invested over $1 billion in the QIT Madagascar Minerals project for mineral sand mining.

However, corporate confidence remains mixed. Rio Tinto is reviewing its 80% stake in QIT Madagascar Minerals, creating uncertainty about long-term titanium operations. This corporate ambivalence reflects deeper concerns about Madagascar’s political and economic stability. The Coface 2025 risk index flags significant headwinds, highlighting weak governance as a persistent deterrent to capital-intensive resource development.

Investment Factor	Status
Graphite Reserves	26+ million tonnes (world-class)
Annual Rare Earth Production	7,000 tonnes
Rio Tinto Investment (QIT)	Over $1 billion, now under review
Mining’s GDP Contribution (2023)	5% (significant growth opportunity)

New Mining Code and Policy Framework Drive Market Confidence

The 2023 Mining Code implemented before the October 2025 government transition established standardized procedures for foreign investors. The legislation provides stability guarantees for mining permit holders and clarifies permitting processes to reduce arbitrary regulatory decisions. Fiscal incentives reward major investments, offering exemptions on income tax, customs duties, and value-added tax for corporations committing over $50 million.

Mining permit issuances remained suspended for 12 years starting in 2011, severely constraining sector growth. The suspension officially lifted in late 2024, reopening opportunities for operators. Regulatory challenges historically included unpredictable licensing processes, corruption concerns, and infrastructure limitations. Michael Randrianavony, co-founder of Antananarivo-based GEMV_VSS mining group, noted that many foreign concessions remain undeveloped due to complex regulatory environments.

Regional Investment Partnerships Diversify Capital Sources

Madagascar increasingly attracts UAE and Saudi Arabia investment alongside traditional Western financing. This geopolitical realignment creates alternatives to American and Chinese capital dominance. Regional powers offer new funding pathways but introduce additional political complexity for resource sector operators. The involvement signals recognition of Madagascar’s strategic mineral significance for critical technology supply chains.

Meanwhile, China’s declining fixed-asset investment affects economic dynamics across Africa. Chinese firms have historically participated in Madagascar’s mining and infrastructure sectors, and slower capital deployment could create funding gaps or opportunities for competing investors. Sumitomo’s Ambatovy project continued operations normally through the political transition, demonstrating some operational resilience despite instability.

What Will Determine Madagascar Mining Investment Success in 2026?

Madagascar’s mining sector trajectory hinges on balancing three critical factors. First, the new government must sustain investor-friendly policies established in the 2023 Mining Code despite political instability. Second, corporate confidence requires demonstrated governance improvements beyond symbolic gesture to address corruption and transparency concerns. Third, infrastructure development—particularly electricity access and transportation networks—remains essential for economic viability of large-scale extraction.

The prospect of 5.3% national economic growth projected for 2025 depends substantially on mining sector expansion. International companies stand ready to invest but require regulatory maturity before deploying major capital. Political uncertainty creates a wait-and-see posture among sophisticated investors despite government backing of specific projects. The next 12-18 months will reveal whether new leadership can translate resource wealth into sustained economic opportunity.

“International companies are ready to get involved but they need some more mature legislation to open up the industry before they put down any further major investments.”

— Michael Randrianavony, Co-founder, GEMVVS Mining Group

Sources

• African Business – In-depth analysis of Madagascar’s mining sector political uncertainties and government initiatives (December 2, 2025)
• AInvest News – Coverage of Rio Tinto review, government backing for mining projects, and investment risk assessment (December 15, 2025)
• U.S. State Department – Official investment climate statement detailing mining code updates and tax incentives for foreign operators (2025)